Stockton Rental Market - How much do apartments rent for today.

[Chris V.]

Stockton Rental Market – From the Renters Perspective.

A few months ago I acquired seven additional units in Stockton, CA. Most of these units are, in my opinion under-rented. After I get them stabilized I plan to bring the rents closer to market, so I can at least have the idea that I am making some money:). In order to get some idea of what the current rents in Stockton are I spend a few hours on Craigslist plowing through FOR RENT posts. I find this to be a great indicator for rents in my segment. I was amazed, shocked almost, so I thought I’d share my findings.

Under $500 - Rooms

The only way to sleep under a roof for under $500 is to rent a room from someone. That’s it. No exceptions really.

$500 to $600 – Questionable Studios

Almost nothing under $600 either, a few questionable studios mostly.

$600 to $700 – Undesirable 1 Bedroom

Between $600 and $700 the 1 bedroom becomes available. Most of these are in apartment complexes like around Gateway or downtown. Nothing too desirable, bit finding a place to live under $700 where the owner pays W/S/G is possible.

$700 to $800 – Still Mostly 1 Bedroom territory, but some 2 Beds

Over $700 is where you start to see two bedrooms. Still a lot of 1 bedrooms though. Even some 3 bedrooms in god-awful areas like around Acapulco. Surprising how few 2 bedrooms 1 baths there were available at this price. There were a very few 2 bedroom / 2 baths in this segment but nothing structural.

$800 to $900 – Solid 2 Bedroom 1 Bath Territory

This is where it’s pretty easy to find a 2 bed 1 bath unit. Some bigger units and even the occasional tiny house, but that was the exception. Still most of the offering seemed to come from the large apartment complexes. Very few 3/2 duplexes to my surprise.

$900 - $1000 – A few Houses and 3/2’s.

Surprisingly few houses and 3/2 units.

$1000+ Houses and Everything Else

This is where houses really start and where I will stop my analysis, since I don’t compete in that market. What was most surprising to me is how many studios, 1 bedrooms and 2 bedrooms there still were in this segment…

My Conclusion

I had not checked rents for a while. The only rents I saw where those on rental listings for sale. And those typically lag behind the market quite a bit because the previous owner kept the rent similar to when the tenant moved in and did not raise it much. It turned out they lagged behind quite a bit more than I thought.

So what this craigslist dive tought me is that the Stockton rental market is hot and rents have gone up quite a bit. I was also surprised how little variation there was in the offerings and how little one can rent for say under $800 (utilities not included).

I try to look at this from the perspective of the tenant who’s rent I am about to raise and my conclusion is that I can go up quite a bit, even for units that are not totally redone. Tenants frankly don’t have a lot of options, unless they want to: A.) leave Stockton, or B.) want to seriously downgrade their lifestyle.

For example one of the buildings I just bought has two 2bd/2bth/2cargarage units in decent shape that are currently renting for $750. I now feel pretty confident that I can raise that to $850 without risking the tenant finding a better deal elsewhere. If they do leave I would start marketing the units at $895 for starters, just to see what would happen.

Anyway, I hope this was of some help to you. If it was, please click on the VOTE button, so I know where I should spend my time on:). Also, feel very welcome to comment what you are renting your units for in Stockton, so we can all compare notes:)...

[Chris V.]

Originally posted by @Account Closed:

What do you do to rehab your units when a tenant leaves? On average. What costs are entailed?

This is great information.

 Thanks! (If you like the post make sure to hit the VOTE button so I know I am not just doing this to keep myself busy:) )

Anyway, rehab costs of the interior of a unit range between about $3000 for Carpet & paint, cabinet refinishing and new Formica counter tops.

You can easily take it to over 10K if you want to put in tile, replace all cabinets, add stainless appliances, square decora switches and plugs, put in granite counter tops and rebuild the kitchen fluorescent tube box into recessed lighting and put in a new bathroom. 

I have gone both routes, and found that sadly enough route 1 gives you more bang for your buck. Doing this (rehab instead of rebuild) does feel like kicking the can down the road, but then again, you could argue that all of life is just kicking the can down the road...:( 

Personally I really like to do the quality (rebuild) approach, but what I found is that if you do one thing quality, you need to do the next thing quality etc. etc. etc. For example if you are going to do the the 10K+ rebuild inside you will also want to get rid of those horrible aluminum windows. And when you do those, you might as well do the siding and if you do that you might as well paint the building, after that the old garage doors look really crappy so you are tempted to put in new ones, might as well add and electric opener while you are at it etc. etc. etc. Its basically the Rehab version of: "if you give a mouse a cookie":). Only in this version you are both the mouse AND the boy.:)